Starting a travel business can be both exciting and challenging at the same time. It is exciting because you get to meet different people from all different cultures and help them create unforgettable experiences. However, getting approved for a proper high-risk travel merchant account can be a time consuming process. Take your time & choose wisely.
The travel industry is not a “by the book” industry. It demands plenty of creativity and can be very competitive.
To own a successful business, you need to be on top of the latest trends and always find new ways to reach clients. You also need to have a high-risk travel merchant account to receive payments for your services.
But what do you do when banks and payment processors consider your travel business unsafe and do not want to offer you any way of accepting payments?
It means finding a trustworthy high risk payment services company capable of handling the difficulties associated with a high risk travel merchant account.
Finding a merchant services company that can get you approved with a merchant account even with the risks involved is not an easy task. Practice patience and do your research before making the first decision.
Reasons for High Risk in the Travel Industry
The travel sector is the largest service industry in the world. Every year, the industry has an enormous impact on the global economy because of the trillions of dollars it brings in revenue and the millions of people who have opportunities to work in the sector.
But even as the travel industry continues to grow in leaps and bounds, many businesses operating in the sector find it hard to run their operations smoothly. This situation makes acquiring banks and other financial institutions uncomfortable about doing business with travel companies.
But why are these institutions not keen about working with the travel sector when it is so profitable?
For starters, credit card fraud in the travel industry has one of the highest rates in the world. And many travel companies do not deal with this menace well enough.
When credit card fraud is committed, the owner of the card hardly pays the price. Most times, it is the travel merchant that pays the price, once it is discovered the card was used illegally.
Banks, credit card processors and other financial institutions usually side with issuing banks and cardholders over disputes. These institutions often show little sympathy for these travel companies. They feel these travel agencies only have themselves to blame.
Most fraudsters target small travel companies because they know these businesses lack the anti-fraud tools or strict screening procedures to uncover their criminal activities.
That is why it is easy for these fraudsters to get unsuspecting travel agents to authorize transactions from stolen credit cards.
Many travel businesses make the mistake of not confirming the identities of cardholders before going ahead with transactions.
Another reason why opening a high-risk merchant account is far from being a simple process is the bad reputation of the travel industry when it comes to chargebacks and cancelations.
High ticket cancelations and large percentages of chargebacks make it tricky for financial institutions to work with travel merchants too.
When a customer disputes a purchase, the credit card company usually reverses the charge by debiting the merchant’s account.
Under the Fair Credit Billing Act, people can challenge goods and services they did not accept or were not delivered as agreed.
For example, an IT consultant can call off his flight from Los Angeles to New York even if it was booked months ahead. If he is not satisfied with the response of the airline agent, he can call his credit card company to reverse the payment.
Chargebacks and cancelations are bad for business. Even when the money is reversed, travel merchants can still be charged a fee by the issuer and face stiffer penalties and additional fines.
It is just too much for banks to deal with and most of them prefer to avoid this type of scenario altogether.
Travel has the highest chargeback rate in the country, with almost twice the average of other leading sectors.
But despite these setbacks, you still have to find a way to open a merchant account for your high risk business.
When Your Travel Business is High Risk—What do you do?
Travel businesses are not the only ones that have to deal with excessive chargebacks, fraud and bad credit history.
Getting a merchant account for your business starts with finding a knowledgeable, high-risk merchant account provider with experience in the travel industry.
These qualified, high-risk account providers are experts when it comes to working with travel companies & tour operators considered unsafe by financial institutions. They are the go-to solution and know what is required to set up merchant accounts.
Advantages of Opening a High-Risk Travel Merchant Account
There are many benefits to why you should use a specialist provider to process your high-risk travel merchant account application.
- Chargeback prevention: High-risk companies provide tools that minimize chargebacks and also respond quickly with solutions when incidents occur.
- Extended coverage: Access to larger markets by accepting payments in multiple currencies.
- More profits: A high-risk travel account offers a better opportunity to scale up your business than a low-risk merchant account.
A proper high-risk travel merchant account gives you the option of running your business from a physical location or taking it to the web.
With this type of account, travel businesses get to handle traditional and online credit and debit card processing alongside eCheck and ACH payments as well.
Choosing a Payment Gateway & Virtual Terminal for Your Business
A secure payment gateway approves online payments and transfers funds from the customer’s credit card to your merchant account.
The credit card processor system allows customers to pay on your website without having to be redirected elsewhere.
A secure payment gateway connected to your website gives you leverage to operate around the clock, accepting payments 24/7 and in multiple currencies if you choose.
When it comes to making a success out of any online business, the payment process must always be a simple one. It has to be straightforward and must also deliver a quick end result.
If a customer has to jump through hoops to navigate your website, they will find it difficult to return, even if you offer discounts and friendly prices.
It is likely the customer will move to your competitor offering a better buying experience.
What You Need in a Secure Payment Gateway
It is not enough for a high risk provider to simply offer you a way of collecting payments online.
As mentioned earlier, it should be an effortless process where bookings and reservations are completed as soon as payments are made.
You can often put your business in jeopardy if a customer has to make a booking and wait a few hours or even return the next day to complete a transaction.
Offer discounts for returning customers through your secure payment gateway system. Always try to provide flexible payment schedules for larger transactions.
Make your cancelation policy crystal clear so that your business does not crumble under excessive chargebacks.
Card Not Present fraud makes up to 60% of chargebacks in America. Experts call this type of chargeback “friendly fraud” because customers lie or invent reasons why their money should be refunded.
Automating your credit card process is the best way to avoid CNP fraud. When payments go through an automated card processor, you benefit from the chargeback prevention techniques it offers.
You should try not to take credit card payments over the phone because it is risky, especially when you do not have the capacity to verify the information that is given to you.
As a business owner, always test the payment gateway yourself before letting it go live. With that little experiment alone, you can help ensure things are in working order and you will know first-hand if any improvements need to be made.
Customer support should always be available. Helping customers who are unsure of how to find something on your site or possibly proceed with a payment process is always key.
If your business is meant for people outside America, always consider offshore payment methods your customers will find easy to access. It is important to find these payment methods ahead of time to help increase your chances of making more profits.
Security is a major concern. You need assurance that the information your customers provide will be well protected, before going ahead with the payment gateway installation. Always make sure you choose the proper integration based on the front end travel software you are using.
Always choose a merchant account and payment gateway with a track record of keeping sensitive data safe and secure.
Last Words on a High-Risk Travel Merchant Account
When choosing a high risk travel merchant account, do not forget to consider the additional fees you will need to pay for accepting payments online.
Setup fees, inflated transaction costs and higher ongoing monthly maintenance fees are common. Ask questions about hidden charges so that you are not taken by surprise.
It is not always up to a merchant processor or merchant underwriter to decide if a lower percentage rate, higher transaction fee or additional monthly fees is the best option for your startup travel business. The sponsoring banks usually have a say in this and these decisions are made jointly.
High risk merchant account underwriters will ask for rolling reserves on newer business types. Credit scores and bank statements are always checked in advance before making decisions on an approval for processing volumes.
Please contact one of our seasoned professionals at 800-419-1772 should you have any additional questions pertaining to your travel related business. Our representatives are readily available and here to help you succeed in your business venture. SecureGlobalPay, payment solutions that make sense!